Final Week of July Presents Many Opportunities for Fundamental Forex Trades

Published on: 07/31/18 11:13 AM

Category: Uncategorised

The global trade war started by United States President Donald Trump is an issue that factored significantly in the forex markets during July. As the month comes to an end, the U.S. President is also facing many legal headaches, but nothing that suggests political instability that will spill over to the forex world. The following are some of the most significant fundamental events and announcements happening in late July, according to DailyFX:

USD May Retain Strength Thanks to Crude Oil Situation

As the Yemeni civil war intensifies, the conflict is spilling over to the shipping lanes of the Red Sea, which are used by the Kingdom of Saudi Arabia to transport crude oil. Two oil tankers have come under attack by Yemeni rebels, and one of the ships sustained damage. While the Saudi oil giant ARAMCO handles this situation, demand for American oil at lower prices will increase, thereby boding well for the greenback.

U.S. Interest Rates May Continue Climbing

Future announcements by the Federal Open Markets Committee with regard to interest rates are widely expected to be cautious and protective; in other words, forex traders believe that the prime rate will increase at least two more times this year, and this is good news for those who intent to take long USD positions. Economic forecasts suggest that rate hikes could materialize in September and December.

GBP Expected to be Resilient Despite Brexit Uncertainty

The Bank of England’s fist meeting in August will likely result in an interest rate increase, but the pound sterling is not expected to move beyond a pip or two in any direction. The Brexit panic of recent weeks will likely subside in August as both the United Kingdom and the European Union continue their negotiations to ensure that the UK does not face economic catastrophe when it exits the EU; this is something that neither side wants despite political differences.

Yen Pressures to Continue in August

The FOMC meeting and the strong outlook of the USD will put pressure on the yen as the Japanese economy does not show signs of immediate improvement. Prime Minister Shinzo Abe’s failed attempt to be excluded from Trump’s trade war a couple of months ago has already been priced into the market, and things are not expected to change for the time being.

Canadian Dollar May Enjoy Boost Thanks to Various Factors

The Trump trade war has impacted American and Canadian relations, but Prime Minister Justin Trudeau has been able to rally patriotic support after announcing a series of retaliatory import tariffs on a large basket of products imported from the U.S. Canadian gross domestic product forecasts are strong, and the domestic economy is on track to continue growing.